990807 Australian Beef Sees Pay-Off from U.S. HeatwaveAugust 6, 1999Sydney - Australia's big grassfed beef industry expects a payoff from this week's sharp spike in grains prices triggered by the United States heatwave. Hectic trading in Chicago wheat futures, which smashed turnover records on the Chicago Board of Trade and the Sydney Futures Exchange this week, have been accompanied by jumping prices as traders fear major crop losses in the United States. A surge of more then 7% in Chicago wheat futures prices on Monday, followed by a 5% jump in Sydney Futures Exchange wheat futures the next day, have mostly held the higher ground as prices in the entire grains and oilseeds complex ratchet up. Rising prices were good news for Australia's A$2.8 billion a year beef export industry, said Peter Weeks, manager of market information and analysis for Meat and Livestock Australia (MLA). Significant heatwave effects on the U.S. grain harvest would aid Australia's beef export trade through its impact on the supply of fed pork and poultry to the American market, Weeks said. “The prospect of another year of low (grains) prices was not good,” Weeks said. Justin Toohey, executive director of industry body the Cattle Council of Australia, said higher grains prices in the longer-term would be expected to lead to lower numbers of U.S. cattle on feed and to cause a new round of herd liquidation. Weeks discounted reports this week of early liquidations in the U.S. herd simply because of the latest grains price spike. The U.S. herd had been in the process of liquidation for about five years and the feedlot sector had already purchased stored grain, he said. But higher grains prices would have a real impact on future placements from the coming harvest, he said. Australia's major beef export markets are Japan, where Australian grassfed product competes with U.S. grainfed beef, and the U.S., where Australia sells mainly manufacturing beef. Higher grains prices, through competitive effects on world markets, are likely to further boost the turnaround in fortunes for Australia's beef sector, which has been slammed in recent years by changing consumer tastes and by Asia's economic crisis. After a near-halving of Australia's beef export volume in 1998, exports have clawed their way back this year to a level about only 15% less than before the Asian crisis hit, in the closing months of 1997. Australia's big and once-burgeoning live cattle trade is also recovering impressively from a 40% slump last year. Australia's total exports of beef and veal rose by 14% in the four months to April this year to 247,659 tonnes, while most export prices have been on a rising trend. Australian beef exports to Southeast Asia as a whole in the six months to June this year recovered to 13,144 tonnes from 9,900 tonnes in the previous corresponding period. Exports in the same period of 1997 amounted to 19,700 tonnes. Indonesia, previously the largest market for Australian live cattle trade taking 433,0000 head of Australian exports in 1996/97, is yet to recover. Indonesia took only 19,500 head in the five months to May this year, well up on the 2,000 head taken in the same period of 1998 but well down on pre-crisis levels. However, exports are running well to the Philippines and Malaysia in 1999, with Australia's total exports of live cattle to Southeast Asia recovering to 133,000 head to May, up from 89,000 head in the same period last year and headed toward the 188,000 head exported in the same period of 1997.
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